Hélène:
Hello, and welcome to the Procurement Game Changes the podcast for leaders that make a difference.
Today we’ll discuss how to convince your business lines that procurement done right, can create value. And that’s why I’m delighted to receive Fred Leeds head of Indirect Procurement, North America at Pernod Ricard .
Fred is a highly accomplished global procurement and purchasing executive with extensive experience improving efficiencies and profitability for various industries.
He’s currently working for Pernod Ricard US. A convivial responsible and successful Global Wine and Spirits group, and the number one premium spirits organization in the world. So welcome to the show. Fred.
Fred Leeds:
Thanks, Hélène. It’s great being here. And thanks for the opportunity to promote this podcast. I am required to state that anything I say here is solely my opinion and not, does not represent the views of Pernod Ricard.
Hélène:
Of course. So, Fred, could you tell us what led you to procurement?
Fred Leeds:
Yeah, it’s an interesting story. I started my career, in education in science, was a bachelor’s degree, and then I went to med tech school.
And I was working in the laboratory for a number of years, and while I was there, I started to identify opportunities in working with suppliers to negotiate price.
And it became part of the job that I enjoyed the most, which was engaging suppliers and negotiating pricing and increasing service levels.
And, had no formal procurement training at that point. But as I was working in the lab, I decided to expand my career and my education went back and done an MBA.
And, upon graduating I thought, what can I do to take the science background, but also take this desire for negotiation and the business acumen?
And that led me to working in procurement for pharmaceutical company. So, I led the procurement group for the R of the R&D, which is research, at a major pharma company for a number of years, and that, kick started my, career in procurement and I’ve been in procurement now for over 20 years.
Hélène:
Well, thank you. It’s funny that, so many of my guests are not originally from the procurement field and like got there like as an opportunity for a change of career or a proposition for a manager. So that’s funny to see that there are not many people who started their career in procurement, actually.
Fred Leeds:
Yeah, I always say that no one grows up and goes to school and says, I wanna be in procurement. It’s really, situational.
Throughout my career I’ve worked with engineers, I’ve worked with lawyers, I’ve worked with businesspeople, and it’s kind of a conglomeration in a cornucopia of different skill sets and mindsets that make a successful procurement organization.
The role of procurement in an organization and what can one expect from its procurement business lines?
Hélène:
Yeah, I agree. So, like today we’re gonna talk about one of the challenges for procurement, which is to be trusted by business lines. And, it has a prerequisite, and it is that you need to show that procurement done right can create value for the organization.
And this is particularly clear for small and midsize companies that don’t have already an established procurement group, but it can also be looming for larger companies that have had a bad experience with a previous procurement organization.
So how would you define, in a few words the role of procurement in an organization and what can one expect from its procurement business partner?
Fred Leeds:
Well, I think it depends, and that’s always a kind of a cheeky kickoff to responding to a question, but it depends on the maturity of the organization.
But if I were to give a short definition that spans all procurement organizations, I would say that the role of procurement is to solve problems, make lives easier, be a perceived master of everything, and do it with a smile.
Hélène:
And you haven’t talked at all about buying and purchasing. That’s well
Fred Leeds:
I think you’re gonna notice a theme to my approach to procurement and how to be successful, especially on the indirect side. It involves more of the people and the process than it does the procurement.
Procurement, whether you follow at Kearney’s 15 steps methodology or a derivation thereof, procurement is a very straightforward process, but that process can only be implemented with people and people is the main core essential of having a successful procurement organization.
Hélène:
Going to perception. And in your experience, how does an organization see the procurement department?
Fred Leeds:
Well, I’ve been fortunate to experience coming into a well-defined and very well-established procurement organization, as well as being the first procurement person charged with building a group. So, the view of procurement has been varied in my experience.
Some have been more open while others have been extremely closed. But regardless, the approach is very similar in that it’s necessary to be viewed as an enabler, viewed as an asset, and viewed as a friendly colleague, word spreads.
And by giving benefit to a few that sets the stage for those few touting the benefit of working with procurement.
Hélène:
I understand that, okay, it’s varied, but when it’s not right or put it that way or positive, how do you change the status quo?
Fred Leeds:
Yeah, so change is essentially, a very difficult process and it’s hard and it takes a lot of time and effort. I think to change the status quote within an organization, it requires you to show your value as a person before trying to show value of procurement.
Let me reiterate again that you will hear me say this over and over. And that is that procurement can only drive value within an organization if the person in procurement is viewed as a valuable asset.
So, you have to find a way to engage your stakeholders at a personal level, make their jobs easier, get quick and small wins, and over time, this is gonna enable you to drive the necessary change.
Hélène:
So that’s interesting I totally share your views on that, and I usually say that my clients who are wondering, how do I get my business line to trust me for, you know, buying consulting and I tell them two things, I’ll tell them, you need to convince them. And it’s a long way. It’s not something that you do overnight. You need to make yourself a credible alternative to the existing way of buying.
The second one is, you need to think about solving problems and not buying things, and that’s how you really, you know, make a difference. So you see that, are to you kinda bounce on what you said before that it’s funny to say that. So, yeah, so it’s a long way we all agree on that. How do you get started? What’s the first step that you should take?
Fred Leeds:
Well, I’ve mentioned to you, I’ve had several experiences of joining procurement organizations, whether they be mature or extremely immature.
But regardless, it really starts with relationships, good engagement with the business partner that needs to happen before any procurement processes or any work can be done. What I like to do is set up introductory meetings and talk about hobbies or sports.
I engage the person that engage the stakeholder at a very personal level. I also ask what their biggest challenges are and take notes, don’t approach the meeting.
First engagement with having to come out with procurement action items, come out of the meeting with an understanding of what their issues are and how you as a business partner can work with them to resolve issues that keep them up at night, you can talk to them about what their favorite football team is or what their favorite holiday is or what their hobbies are, and really gain a personal level, with them.
And by doing that, from there you’ll identify opportunities that enable them to support you as a procurement person as time goes on.
Hélène:
Yeah. So, for I hear, it’s funny, I had that discussion a few days ago with another indirect procurement leader, and she was saying that that is particularly true in indirect because you have so many stakeholders internally, but you still need to develop the relationship and it has to be a person-to-person relationship.
It cannot be something that is done on a platform or online or a digital thing. It has to be personal to, to your point of kind of building the relationship before you do anything else, actually.
Fred Leeds:
Right, right. You know, and I use an example of that when I joined Ricard. I live outside of Philadelphia and the offices in New York.
So, for me it’s a two-and-a-half-hour commute door to door. And I really wanted this opportunity because it was building their indirect procurement organization. So, I was willing to do that commute two and a half hours each way for about four months.
And the reason for that was, I wanted to sit down with each of my stakeholders, I wanted to talk to them, engage with them. I wanted them to see who I was and understand that I wasn’t there as a threat, that I was there as a value. And that was really, I think, set the stage for building a successful group.
Hélène:
All right. So, what are the potential obstacles?
Fred Leeds:
I think that there’s two main obstacles to building a successful procurement organization. The first of them, and I’ll explain in more detail as people. So this can be further stored into what I would consider to be three attributes. One is personality.
So, first of all, you’re never gonna change a person’s personality. They are who they are. So, when engaging stakeholders really need to become a chameleon, you as a procurement professional need to change the way you approach a person or change the way you present your information based on how they want it. Some people are very data driven.
They want to see data, they want numbers, they want precise and quantitative assessments. While other people sort of more of the marketing organization, they want fancy PowerPoint slides. They don’t want any numbers at all because they’re not numbers of people. So being able to regulate yourself and change yourself is how to combat any personality issues.
The second are agendas. You know, there’s, there’s people that have their own agendas that don’t necessarily align with the company. They want to promote themselves; they want to grow professionally.
And you’re gonna face this in any organization regardless of the size. You have to know that you’re not gonna change a person’s agenda, so you need to either work with it or you need to work around it, what you don’t wanna do is get into conflict over a person’s self-promotion or their agenda. You’re there to support.
And then thirdly, I believe is history, depending on whether there’s been a procurement organization that historically has not been a partner, has been more dictatorial, has been, you know, touted as giving edicts on who to choose and why.
You’ve gotta get around that. So go with the flow, acknowledge. Yeah. The previous people that were here, I would agree with you, they were absolutely horrible or they weren’t supportive, but that’s not who I am. I’m going to be here as a resource to support you and support your goals and objectives.
Hélène:
Yeah. So again, it’s about the people, both sides actually.
Fred Leeds:
Right, but if I could, so the second obstacle, because you had asked, I said there’s two. So one is people, the second is really data.
So, any organization that I’ve come into, especially larger organizations who have been formed through mergers, acquisitions, or even organic growth have ERP systems that are coded incorrectly or are very lax in the detail.
So, data is a huge issue from a procurement perspective, but in working with the people, you’ll be able to identify ways to address that and really it can be changed more easily with capital, being able to put other systems in place or add on systems, things like that.
It’s a challenge. I’ve faced it in every company that I’ve worked for, but, eventually, you work to find a way to resolve that.
Hélène:
No, and it’s true. And it’s also about data from the market. You know, I was discussing with a friend who’s a consultant and he works for a very big utility company based in Europe.
And he was telling me that the procurement group is not using market intelligence reports or anything at all for the business for procuring raw materials.
And I thought this is such a huge, how can I say, improvement to use that even if you don’t do that much, but this is so much time and energy that you’re saving, even though the people in your company know things, then you are just, you know, building up something that is based on what the market says.
And that’s another way to do things. There’s always some place, even in a very big organization, you can find ways to do better.
Fred Leeds:
Oh, absolutely.
Quick wins that procurement creates for business lines
Hélène:
So, speaking of value, talking about the quick wins, which I’m sure that is, for that big company. What are the quick wins?
Fred Leeds:
In thinking about this early on and, when you’re engaging your stakeholders, it’s really wise to go after the less emotional categories.
When you look at categories such as media or creative or even temporary staffing, the stakeholders have an emotional attachment to the suppliers that they’ve always used. And the idea of going out to bid, even if the end result is using the same supplier, it elicits a negative emotion.
So it’s hard to gain credibility and get quick wins with those emotional categories. So my recommendation is: go after those less emotional categories, those that people don’t have an attachment to.
Things like office supplies, people don’t care whether they use Staples or WB Mason or whatever the case may be. Yeah.
Occasionally you’ll have a representative who takes someone out to lunch once in a while and tries to build that relationship, but those are more easily broken down than your marketing categories.
Facilities management, another one, not necessarily there’s an emotion attached with there. So I think those that you can sort of move into without eliciting a lot of negative emotion is where you should start.
Hélène:
Yeah. From what I hear, it’s also that intangible or subjective value is that it’s easier to justify the change on a supplier when you are buying furniture or office supplies because you can replace one thing by something very similar as opposed to marketing or legal or consulting, where the value that the supplier brings can be very unique and then it’s hard to measure and to have something that is a real alternative with complete overlap.
So maybe that’s also why it’s easier to start with those tangibles, that’s how they call them that tangible categories.
Fred Leeds:
So Hélène, I agree with you, but when you take what you just said and you look at it from the perspective of emotion, most executives like their consulting company because they’re comfortable. And trying to change that elicits that emotion, that level of discomfort.
So what you’ve said is absolutely true, but I think it still stems back to what I had mentioned, which is emotion.
Hélène:
I think that when you go to subjective value, then the relationship does the extra mile. That’s what makes the, you know, the client comfortable.
So I think that’s a mix of both. But I agree with you that’s about relationship and consulting indeed is about relationships. And that’s obvious. So what can we expand on the longer term?
Fred Leeds:
So the longer term, you know, once you start getting those quick wins and gain a reputation as being a facilitator, a partner, and a valued colleague, from there you can then explore those higher value, more emotional areas of spend.
It has to be organic. You’re not gonna be able to force your way into establishing yourself as a credible procurement individual without having some good experiences within the company and having some business unit stakeholders on your side and as I’ve mentioned before, you gain that by establishing those quick wins and that credibility.
Hélène:
And, would you consider that it’s an opportunity too for professional services, such as marketing, legal, consulting? We discussed about that emotional part. Is it doable to on those categories?
Fred Leeds:
Absolutely. So I’m gonna use consulting as an example. It’s one of the categories that I have found is least approached by procurement for a number of reasons.
Usually, it’s at the high-level executive level where they’re engaging procurement or engaging consultants.
And often it’s done without any procurement involvement. I’m gonna use an example. One of the companies that I worked for, several years ago, the executive team was utilizing a consultant agency, one of the top big four and was utilizing them over and over and over.
And when I had a look at the spend, the expenditure seemed to be a bit more than what I thought the value of these consulting group was was bringing to the organization.
So I sat down and had a meeting with the executive team and of course, this is several years after I started and built the credibility to be able to have that relationship.
I said, Give me a chance. Well, because of the credibility I had built, they were open, not necessarily open, but slightly open to having me run a competitive bid on the next engagement. And we stayed with the same consulting firm.
Initial bid was just over $2 million and through the competitive bid process, and just by letting them know that they were in a competitive bid and getting the business unit to close the door to the back door sales, we were able to drive that down to a 1.4 million engagement.
So we were talking $600,000 plus of reduction of fee without eliminating any of the scope.
Hélène:
I have exact same experience. So this is so true. Relationship is paramount in consulting and consultants use and abuse it.
And so as procurement leaders, we need to advise our clients, internal clients or internal stakeholders, on how to keep their distance on that and be as objective as possible, even though we know that consulting is based on trust.
And so trust needs to be there. So there needs to be some relationship with the consultants, but we still need to stay objective and to be practical in the way we do procurement.
And we buy things just like that, just being, you know, very simple practical approach and that’s enough to bring significant value to the table.
Fred Leeds:
Yep,Yep, Agreed.
Hélène:
So to wrap up that discussion, what is a takeaway? It’s the one thing that we want our listeners to remember from this conversation.
Fred Leeds:
Well, I can’t give you just one. So I really, I always like things that come in threes, right? So, I’m gonna give three pain points.
The first point is you need to focus on supporting your internal stakeholders and not making a name for yourself. If you build trust, you’ll have no issues attaining the cost savings, meeting your goals, putting process improvements in place and, reducing risk to the organization.
Secondly, we have a term here at Pernod Ricard that clearly defines how to engage stakeholders. We thought that we are the “Créateurs de convivialité” and excuse my French.
Hélène:
That’s Okay.
Fred Leeds:
So, the word is convivial and the Miriam Webster dictionary defines convivial as relating to; occupied with or fond of feasting, drinking and good company.
So when I think about that word “convivial”, regardless of the industry that you’re in, it’s a positive and foundational approach. 20 over and engaging tough stakeholders.
Third, do what’s asked of you. And, so often I see people who just forget that that is one of the easiest ways to build credibility within the organization.
Often I’ll see a colleague give the: “it’s not my job” and look over a stakeholder’s needs just because they’re too focused on their cost savings efforts. An example would be a business leader that comes to you because they don’t know how to create [a] purchase order. Well, I’ve seen folks that will default to the, well, I’m not in purchasing, I’m procurement.
That’s purchasing, reach out to AP or reach out to the buyer, whatever buyer, whatever the case may be. Now, don’t tell them to reach out to Jennifer in AP. You reach out to Jennifer and say: Hey Jennifer, this business unit stakeholder is having problems putting a PO in place.
Something very simple. That builds so much trust and credibility within your realm that there’s no downside. So, you know, building that trust is paramount in being able to drive value.
Hélène:
Oh yeah. And I hear, you know, make yourself a facilitator, for everything close or related to procurement and buying, and then they will trust you for the next step. Right. And then you go one step at a time.
I think this is all about people in collaboration and, I really like your views on procurement. Actually, we’ve discussed that before, but I still say that again.
So thank you. Thank you so much for sharing with us today, your experience and your perspective on procurement. Thanks, Fred.
Fred Leeds:
Great. Thanks, Hélène. And I will now narrow everything down to one sentence. I think it was really important, the key takeaway, if you will, and that is: strive to be the most valued person within the organization and that will enable you to become the most valued procurement group within the organization.
Hélène:
Perfect. Thank you Fred That’s It.
Fred Leeds:
Thanks for the opportunity.
Hélène:
So now it’s your turn to tell us about your experience and your challenges when trying to convince your business lines that procurement does bring value in the comment section.
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Thank you for listening and I hope you enjoy this episode. And if that’s the case, don’t forget to give this a thumbs up.
So happy sourcing to you all. Au Revoir.
P.S:- Listen to our previous PGC podcast Here
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